Category: Government

Unintended Consequences of Making My Cold Medicine Hard to Get

SudafedColdCcough.jpg
Source of image: http://www.sudafed.com/products/cold_and_cough.html

When I get a cold, nothing keeps me functioning as well as Sudafed Cold and Cough. Unfortunately, the pills contain pseudoephedrine, which apparently is an ingredient that can be used in the process of making meth. So in their zeal to protect people from their own bad choices, governments across the country, including my own Nebraska, have put increasingly severe restrictions on the sale and purchase of medicines like Sudafed Cold and Cough. Many stores that used to carry the medicine, have dropped it, and those that still carry it, have significantly increased the price.
So the government has made life harder for me. But at least they’ve benefitted the meth addicts, right? Read on:

(p. 1A) Restrictions on the sale of cold medicine appear to be reducing seizures of homemade methamphetamine labs in Nebraska and Iowa.
Both states passed laws last year restricting over-the-counter purchases of cold medicines used to make meth – and both report fewer lab discoveries.
But officials in the two states – and others with similar restrictions – now have a new problem: The drop in home-cooked methamphetamine has been met by a flood of crystal methamphetamine coming largely from Mexico.
Sometimes called ice, crystal meth is far purer, and therefore even more highly addictive, than powdered home-cooked meth.
And because crystal meth costs more, the police say thefts are increasing, as people who once cooked at home now have to buy it.
The University of Iowa Burn Center, which in 2004 spent $2.8 million treating people whose skin had been scorched off by the toxic chemicals used to make meth at home, says it now sees hardly any cases of that sort. Drug treatment cen- (p. 3A) ters, on the other hand, say they are treating just as many or more meth addicts.
And although Iowa child welfare officials say they are removing fewer children from homes where parents are cooking the drug, the number of children being removed from homes where parents are using it has more than made up the difference.

For the full story, see:
“Meth labs decline, but ‘ice’ fills gap.” Omaha World-Herald (Sunrise Edition, Mon., January 30, 2006): 1A & 3A.

Apparently the only current substitute for pseudoephedrine in cold medicines is phenylephrine. But it has several drawbacks. Consider:

. . . pharmacologists, who specialize in the properties of medications, say oral phenylephrine has several disadvantages. First, the effects of the current formulations wear off faster than pseudoephedrine — meaning users will need to take a pill after four hours instead of up to six for the shorter-acting pseudoephedrine. Pseudoephedrine also comes in long-acting 12- and 24-hour pills, an option not currently available for over-the-counter phenylephrine.
Another question is whether oral phenylephrine is as effective as pseudoephedrine. There have been no major published head-to-head trials comparing the two, and neither Pfizer nor Germany’s Boehringer Ingelheim GmbH, a major supplier of powder phenylephrine for pills, has studied the matter. In 2003, Pfizer conducted a consumer survey in which 400 mall-goers with stuffy noses were given either standard Sudafed or Sudafed PE. In a telephone survey a week later, about 70% of each group reported “good” or “excellent” results, the company says.
But pharmacologists say there are reasons for caution. For one, oral phenylephrine is heavily absorbed by the intestine and broken down in the liver — so only 6% to 40% of the actual medicine makes it into the blood stream, compared with nearly all of pseudoephedrine, scientists say. Moreover, its use as a decongestant has been far less heavily studied than pseudoephedrine’s. The FDA review cited more than six studies, primarily unpublished work from a single laboratory, which found it effective. The review also cited a nearly equal number of studies from a variety of laboratories that found phenylephrine no better than a placebo — but the agency concluded overall that it does work. Little has been published since then.
The American Heart Association warns that both drugs can raise blood pressure, so people with high blood pressure or heart disease should consult their doctor before taking them. It isn’t known whether phenylephrine poses more or less of a risk than pseudoephedrine, though some experts say phenylephrine has been less tested so may merit more caution.
If a stuffy nose is making you miserable and only the most proven remedy will do, you may want to take the time to look for pseudoephedrine — even if it means you have to wait at the counter.

For the full story, see:
LAURA JOHANNES. ” ACHES & CLAIMS; Choosing a Pill for That Cold.” THE WALL STREET JOURNAL (Tues., December 27, 2005): D4.

Free-Market ‘Chaos’ Versus Planning, in New Orleans

The rebirth of New Orleans does, . . . , require a leap into the unknown. It can’t be meticulously planned. Preserve the old buildings. Rope off the lowlands. But then let imagination takes its course. Unfortunately, Mr. Nagin’s Bring Back New Orleans group is loaded with central planners prescribing a dream city built around such highlights as light-rail transport, a “jazz district” and a neuroscience center. Typical is Michael Cowan, head of the city’s Human Relations Commission, who warned that “the alternative to a ‘good-enough’ plan for the future of our city is free-market chaos, also known . . . as every man for himself and the devil take the hindmost.”
Actually, it was precisely this chaos that made New Orleans a great city in the first place. It was planning — specifically, the horrifying housing projects, largely destroyed in Katrina; the stultifying school system; the Superdome and other wasteful public-works projects — that held the city back.

For the full commentary, see:
JAMES K. GLASSMAN. “CROSS COUNTRY; Back to the Future.” The Wall Street Journal (Thurs., January 12, 2006): A13.

“Going Postal” Shows that Free Market Jobs Are Not the Only Ones with Stress

WASHINGTON (AP) – The deadly shootings at a California mail processing plant are a grim reminder of cases in the 1980s and ’90s that raised public concern and brought the post office and its employees and supervisors together in an effort to end violence at work.
Postmaster General John Potter met with union leaders Tuesday to discuss the tragedy, while Deputy Postmaster General Patrick R. Donahoe headed to the scene of the shootings.
Donahoe urged all postal employees to stay vigilant about facility security.
“That’s the best line of defense to keep ourselves safe,” he said, urging workers to make sure all doors close correctly and all locks function properly, and that only authorized people are in postal facilities.
In the California case, the shooter had taken an identification badge from a postal worker at gunpoint, postal officials said.
A 1986 case in Edmond, Okla., resulted in 14 people being killed before a disgruntled carrier took his own life. It was followed by a series of killings stretching into the 1990s that led to the rise of the phrase “going postal.”
In 1992, the post office and several of its unions and supervisors organizations signed a joint statement calling for zero tolerance of violence in the workplace, as well as banning harassment, intimidation, threats or bullying.
Some incidents were traced to disputes between workers and their managers, and in the statement the Postal Service promised that people who do not treat others with dignity or respect would not be rewarded or promoted.

For the full story, see the online version of the Omaha World-Herald:
“Postal Shooting a Grim Reminder of Past.” Omaha World-Herald (Weds., February 1, 2006).

Wal-Mart Is Front-line Soldier in Real War on Poverty

 

BALTIMORE — In Big Labor’s war against Wal-Mart, "collateral damage" — in the form of lost jobs and income for the poor — is starting to add up. Of course, since the unions and their legislative allies claim that their motive is to liberate people from exploitation by Wal-Mart, these unintended effects are often ignored.

Here in Maryland, however, that’s getting hard to do. The consequences of our legislature’s override of Republican Gov. Robert Ehrlich’s veto of their "Fair Share Health Care Act" on Jan. 12 will be tragic for some of the state’s neediest residents. The law will force companies that employ over 10,000 to spend at least 8% of their payroll on health care or kick any shortfall into a special state fund. Wal-Mart would be the only employer in the state to be affected.

Almost surely, therefore, the company will pull the plug on plans to build a distribution center that would have employed 800 in Somerset County, on Maryland’s picturesque Eastern Shore. As a Wal-Mart spokesman has put it, "you have to take a step back and call into question how business-friendly is a state like Maryland when they pass a bill that . . . takes a swipe at one company that provides 15,000 jobs."

 . . .

. . . , legislators should be mindful that companies like Wal-Mart are not the enemy but rather front-line soldiers in a real war on poverty. The profit motive leads them to seek out areas where there is much idle labor and put it to work. Where they are prevented or discouraged from doing so, the alternative job prospect is rarely a cushy spot in the bureaucracy. Rather, it is continued idleness and hardship.

 

For the full commentary, see:

STEVE H. HANKE and STEPHEN J.K. WALTERS. "Cross Country; Hard Line State." The Wall Street Journal (Thurs., January 26, 2006): A11.

 

Using a T-shirt to Tell the Story of Progress


Source of image: Amazon.com

The protests occurred on ”a cold day in February 1999.” Ms. Rivoli was watching as students gathered at the gothic centerpiece of Georgetown to demonstrate against the International Monetary Fund, the World Trade Organization, and other putative villains of international trade. The crowd, Ms. Rivoli noticed with characteristic acuity, had ”a moral certainty, a unity of purpose” that permitted it to distinguish black from white and good from evil ”with perfect clarity.” One woman seized the microphone and asked: ”Who made your T-shirt? Was it a child in Vietnam? Or a young girl from India earning 18 cents per hour? Did you know that she lives 12 to a room? That she shares her bed and has only gruel to eat?”
Ms. Rivoli did not know these things, and she wondered how the woman at the microphone knew. But she decided to find out. In the rest of her narrative, the author tells the story of ”her” T-shirt, which she purchased for $5.99 by the exit of a Walgreen’s in Fort Lauderdale, Fla. ”It was white and printed with a flamboyantly colored parrot, with the word ‘Florida’ scripted beneath.” A company in Miami had engraved the front, after buying the shirt from a factory in China. The Chinese manufacturer had purchased the cotton used to make the shirt from Texas. Eventually it will end up as part of a large but little-known market for used clothing destined for resale in East African ports.
. . .
By looking across history to the shifting center of textile manufacturing from Manchester, England, to Lowell, Mass., to South Carolina to Japan and, finally, the developing nations of Asia, Ms. Rivoli discovers a universal truth. Without making light of the horrors experienced by workers, she asserts that their jobs were a little better than other available options (usually farm work) and, what’s more, that textile factories led to advances in industrialization and, just as dependably, in living standards. It is not too much to say that she uses the T-shirt to tell the story of progress.

For the full commentary on Rivoli’s book, see:
ROGER LOWENSTEIN. “OFF THE SHELF; Travels With My Florida Parrot T-Shirt.” The New York Times, Section 3 (Sun., August 21, 2005): 7.
The book is:
Pietra Rivoli. The Travels of a T-Shirt in the Global Economy: An Economist Examines the Markets, Power, and Politics of World Trade. John Wiley & Sons, 2005. ISBN: 0471648493

Private Property Rights Would Help American Indians

(p. W11) The main problem with Indian reservations isn’t, as some argue, that they were established on worthless tracts of grassland. Consider the case of Buffalo County, S.D., which Census data reveal to be America’s poorest county. Some 2,000 people live there. More than 30% of the homes are headed by women without husbands. The median household income is less than $13,000. The unemployment rate is sky high.

Just to the east of Buffalo County lies Jerauld County, which is similar in size and population. Yet only 6% of its homes are headed by women without husbands, the median household income is more than $30,000, and the unemployment rate hovers around 3%. The fundamental difference between these two counties is that the Crow Creek Indian Reservation occupies much of Buffalo County. The place is a pocket of poverty in a land of plenty.
Maybe we should give land back to the rez-dwellers, so that they may own private property the way other Americans do. Currently, the inability to put up land as collateral for personal mortgages and loans is a major obstacle to economic development. This problem is complicated by the fact that not all reservations have adopted uniform commercial codes or created court systems that are independent branches of tribal government — the sorts of devices and institutions that give confidence to investors who might have the means to fund the small businesses that are the engines of rural economies.
. . .
. . . the real tragedy is that reservations, as collectivist enclaves within a capitalist society, have beaten down their inhabitants with brute force rather than lifting them up with opportunity. As their economies have withered, other social pathologies have taken root: Indians are distressingly prone to crime, alcoholism and suicide. Families have suffered enormously. About 60% of Indian children are born out of wedlock. Although accurate statistics are hard to come by because so many arrangements are informal, Indian kids are perhaps five times as likely as white ones to live in some form of foster care. Their schools are depressingly bad.
Even if casino revenues were able to address these soul-crushing problems — a doubtful proposition — most reservations are too isolated geographically to profit from big-dollar gambling. Yet the rise of the casinos may help point the way forward: Their ability to flourish contradicts the tenured Marxists in ethnic-studies departments who claim that communitarian Indian cultures aren’t compatible with market capitalism. After all, it takes entrepreneurship to run some of the world’s biggest casinos.
What’s more, this modern-day entrepreneurship is part of a long tradition: Meriwether Lewis (of Lewis & Clark fame) described the Chinooks as “great hagglers in trade.” I once visited Poverty Point, a 3,000-year-old set of earthen mounds in Louisiana; the museum there displayed ancient artifacts found at the site, including copper from the Great Lakes and obsidian from the Rockies. These prehistoric Americans were budding globalizers, and there’s no reason why their descendants should remain walled off from the world economy.

For the full story, see:
JOHN J. MILLER. “The Projects on the Prairie.” The Wall Street Journal (Saturday, January 27, 2006): W11.(Note: ellipses added.)

Good Rules Encourage Entrepreneurship, Resulting in Vibrant Economy

Some useful observations from the 2004 co-winner of the Nobel Prize in Economics, Edward Prescott:

Good tax rates, . . . , need be high enough to generate sufficient revenues, but not so high that they choke off growth and, perversely, decrease tax revenues.  This, of course, is the tricky part, and brings us to the task at hand:  Should Congress extend the 15% rate on capital gains and dividends?  Wrong question.  Should Congress make the 15% rate permanent?  Yes.  (This assumes that a lower rate is politically impossible.)
These taxes are particularly cumbersome because they hit a market economy right in its collective heart, which is its entrepreneurial and risk-taking spirit.  What makes this country’s economy so vibrant is its participants’ willingness to take chances, innovate, acquire financing, hire new people and break old molds.  Every increase in capital gains taxes and dividends is a direct tax on this vitality.
Americans aren’t risk-takers by nature any more than Germans are intrinsically less willing to work than Americans.  The reason the U.S. economy is so much more vibrant than Germany’s is that people in each country are playing by different rules.  But we shouldn’t take our vibrancy for granted.  Tax rates matter.  A shift back to higher rates will have negative consequences.
And this isn’t about giving tax breaks to the rich.  The Wall Street Journal recently published a piece by former Secretary of Commerce Don Evans, who noted that “nearly 60% of those paying capital gains taxes earn less than $50,000 a year, and 85% of capital gains taxpayers earn less than $100,000.”  In addition, he wrote that lower tax rates on savings and investment benefited 24 million families to the tune of about $950 on their 2004 taxes.
Do wealthier citizens realize greater savings?  Of course — this is true by definition.  But that doesn’t make it wrong.  Let’s look at two examples:    First, there are those entrepreneurs who have been working their tails off for years with little or no compensation and who, if they are lucky, finally realize a relatively big gain.  What kind of Scrooge would snatch away this entrepreneurial carrot?  As mentioned earlier, under a good system you have to provide for these rewards or you will discourage the risk taking that is the lifeblood of our economy.  Additionally, those entrepreneurs create huge social surpluses in the form of new jobs and spin-off businesses.   Entrepreneurs capture a small portion of the social surpluses that they create, but a small percentage of something big is, well, big.
Congratulations, I say.  Another group of wealthier individuals includes those who, for a variety of reasons, earn more money than the rest of us.  Again, I tip my hat.  Does it make sense to try to capture more of those folks’ money by raising rates on everyone?  To persecute the few, should we punish the many?  We need to remember that many so-called wealthy families are those with two wage-earners who are doing nothing more than trying to raise their children and pursue their careers.  Research has shown that much of America’s economic growth in recent decades is owing to this phenomenon — we should encourage this dynamic, not squelch it.

For the full commentary, see:
EDWARD C. PRESCOTT. “‘Stop Messing With Federal Tax Rates’.” The Wall Street Journal (Tues., December 20, 2005): A14.

Leading Clinton Economist Advocates a Schumpeterian “Dynamism”

Source of book image: http://www.amazon.com/gp/product/product-description/0743237536/104-0088216-5679944


Today’s review of the new Gene Sperling economic policy book in the New York Times Book Review, begins by emphasizing Sperling’s importance in the Clinton administration:

(p. 16) If you were inclined to identify Clintonism with a single person other than the big man himself, that person might well be Gene Sperling – a top campaign adviser in 1992; a tireless advocate of fiscal discipline during the first term; an inveterate policy wonk throughout all eight years of the administration.  So it’s little surprise that this book-length vision for a Democratic economic strategy can best be described as Clintonism 2.0.

NOAM SCHEIBER. “Clintonism 2.0.” The New York Times Book Review, Section 7 (Sun., January 22, 2006): 16.

Here is the opening paragraph of Sperling’s chapter one, which is entitled ” Growing Together in the Dynamism Economy.”

In the 1990s, a new economic era was created when a period of intense globalization collided with an information technology revolution.  Yet precisely defining a "new" economy is less important than understanding the nature of the change.  I believe a more descriptive label is the “dynamism” economy.  Of course, dynamic change in market economies is hardly new.  The mid-twentieth-century economist Joseph Schumpeter identified the process of “creative destruction,” positing that a healthy market economy is continually moving forward, replacing old capital, old industries — and existing jobs — with more productive alternatives.  Yet, what feels most “new” for average citizens is the breakneck speed at which the increased globalization, rapid technological advance, and the explosion of the Internet are putting fierce competitive pressures on the economy and accelerating change not only in products and services, but also in entire job categories and industries.

Part of the first chapter is viewable at Amazon.com. The book citation is: Sperling, Gene. The Pro-Growth Progressive: An Economic Strategy for Shared Prosperity. Simon & Schuster, 2005.

“Dynamism” as a descriptor for the good society also appeals to libertarian economics columnist Virginia Postrel, author of The Future and Its Enemies and webmaster of dynamist.com.

Land Next to Proposed Ethanol Plant Suddenly Declared “Blighted”

(p. 1A) ORD, Neb. – Carl and Charlene Schauer were upset and more than a little offended when the City Council declared their 50-acre cornfield “blighted and substandard.”
Nothing is wrong with the cornfield, located almost five miles outside of town.
Nothing – except its proximity to the site of a proposed $75 million ethanol plant that local officials say will bring 34 jobs to the community of 2,300.
Invented to give cities the power to enlist private development in clearing slums, the “blighted and substandard” designation has become a critical tool for economic development projects across Nebraska.
It allows cities to use property taxes to help pay development costs on behalf of private enterprise, under a mechanism called tax increment financing. That allows increased property taxes generated by improvements of blighted property to be used to help fund the redevelopment.
Blighted land even can be condemned through eminent domain, then turned over to private developers. That practice was upheld by the U.S. Supreme Court last year.
Stunned by that ruling, several Nebraska lawmakers have introduced legislation to prevent local governments from using eminent domain to acquire private property that would be turned over to another private (p. 2A) owner for economic development.
Three bills (Legislative Bills 924, 910 and 799) specifically protect agricultural land, forbidding governments to declare it blighted. A fourth bill (LB 1252) would limit eminent domain to public projects like parks and roads.
And State Sen. Matt Connealy of Decatur proposes a constitutional amendment (LR 272 CA) to remove the requirement that land be designated as substandard and blighted before cities can use property taxes to help private developers pay project costs.
Connealy said it appears some smaller cities are pushing the boundaries of the blight definition.
The Ord ethanol project has been touted by Gov. Dave Heineman, the New York Times and others as an example of small-town hustle and progress.
Carl Schauer’s son, Curt, and his wife, Susan, however, have gone to court to try to stop it.
They live directly across Nebraska Highway 11 from Carl Schauer’s cornfield. Although not included in the proposed ethanol site, their home is less than 1,000 feet from where the plant would be built. They are worried about noise, smell, traffic and health hazards from the around-the-clock operation.
“I guess we’re the sacrificial lambs in the name of economic development,” said Susan Schauer, a licensed practical nurse.
A local official said the city does not want to take even the smallest part of Curt Schauer’s property if he doesn’t want to sell it.
“I don’t think anybody in this community would ever do that,” said Bethanne Kunz of the Valley County Economic Development Board.
After Schauer rejected an offer to buy a strip of his land for a railcar loading area, Kunz said, the ethanol site was reconfigured to leave out Schauer’s property. The field was annexed by the city as part of a redevelopment zone under a Nebraska law that allows small towns and villages to acquire outlying land through “remote annexation.”
The Schauer family still doesn’t know why the field was declared blighted – and it’s worried that the designation could spell trouble. Could their land be taken if another new factory wanted to locate in the area?
“I think it’s wrong that government can take private property and turn it over to private enterprise,” said State Sen. Tom Baker of Trenton.
Government already offers plenty of help – including grants and tax breaks – to business to encourage development, said State Sen. Deb Fischer of Valentine. “Does government have to give away the farm, too?”

Read the full story at:
REED, LESLIE. “‘Blight’ label raises concerns.” Omaha World-Herald (Sunrise Edition, Saturday, January 21, 2006): A1 & A2.

Chinese Version of ‘Eminent Domain”: Villagers Die Protesting Theft of Their Land

“People here have tried everything you can think of to get the problem solved before this happened,” said a resident who gave his name as Chen. “They talked to the village committee, the township and municipal governments. One of them even went to Beijing. But nothing is done – the village officials just simply ignore them.”
Mr. Chen described the peak of the protests, on Saturday night, when the deaths occurred. “It was like a war, so real and so brutal,” he said. “I did not see who started it, but I saw policemen were beating the villagers and the villagers were fighting back with stones and firecrackers.”
Since then, villagers said, many residents are being forced to report each morning to the police, who detain them until late in the evening, when they are allowed to return home until the next morning.
As with so many recent rural protests, Panlong’s problems began with land. Many villagers told stories of having been deceived by corrupt local officials who they said had enriched themselves by selling off rights to the villagers’ farmland.
“Two years back, one day some villagers were asked to attend a routine meeting,” said a 42-year-old farmer who gave his name as Fang. “They went and they paid 10 yuan for participation fees, and they signed in as usual. Later, when we discovered our land was being sold, we asked the village committee to explain what’s going on, and they answered that we had signed the contract. Suddenly we remembered that meeting, and everyone understood that we had already been cheated.”

For the full story, see:
FRENCH, HOWARD W. “Panlong Journal: Visit to Chinese Anytown Shows a Dark Side of Progress.” The New York Times (Thurs., January 19, 2006): A4.

Ayn Rand Admirer Illarionov Pushed Russia Toward Free Market

Image source: WSJ article quoted and cited below.

Since the following interesting article, Andrei Illarionov has resigned. That’s probably a bad sign for Russia, unless you argue that Illarionov can be more effective outside the government than inside it.
The article begins by quoting Al Breach, who is chief strategist at Brunswick UBS:

(p. A13) It’s a one-party state, and if you’re out, you’re out,” Mr. Breach says. “If he can help stop some of the bad things, it’s worthwhile sticking around.”
This year, however, things haven’t gone his way, with state-owned oil and gas companies swallowing up independent oil producers, vastly expanding the state’s presence in the economy. The result, says Mr. Illarionov, has been a fall in private investment in the oil industry and slowing oil-production growth–at a time when world crude prices are soaring. Meanwhile, state outfits have also bought stakes in private engineering companies and taken over the management of Russia’s biggest car maker, AvtoVAZ.
It is all anathema to Mr. Illarionov, a St. Petersberg-trained economist and longtime admirer of Ayn Rand, the American writer who lauded unfettered capitalism. In the early 1990s he was an adviser to Yegor Gaidar, then- prime minister and architect of Russia’s early market reforms. But he quit in 1994, criticizing the government for failing to curb inflation and for putting the brakes on overhaul (sic). He then became one of Russia’s most respected independent analysts: He was the only prominent economist to call for a sharp devaluation of the ruble before the currency crashed in August 1998.
Mr. Putin hired him as an adviser in 2000, and he was a top (sic) force in drafting the liberal, modernizing agenda that the president pushed through in his first term. His ideology — trimming state spending, slashing taxes, cutting red tape and deregulating Russia’s gas, electricity and railway monopolies — became official policy.
Mr. Illarionov was seen as one of the key drivers of crucial overhaul initiatives: a flat income-tax rate of 13%, a rainy-day Stabilization Fund for Russia’s oil windfall, and the decision to dip into the fund to make early repayments on Russia’s foreign debt.
But his reputation suffered in later years from a long, bruising fight over how to restructure the electricity industry, and a quixotic campaign against the Kyoto Protocol, both of which he largely lost. Russia ended up ratifying the climate-change pact last year.

For the full article, see:
GUY CHAZAN. “Putin Insider’s Outsider Game; Adviser Illarionov Preaches Capitalism, but Who Is Listening?” THE WALL STREET JOURNAL (Fri., December 23, 2005): A13.
(Note: There are several differences (e.g., in the title, and in the reference to Ayn Rand) between the online version of this article, and the print version of this article.)